filing-the-fafsa-2015-2016-edition

Filing the FAFSA 120
INCREASING ELIGIBILITY FOR
NEED-BASED FINANCIAL AID
There are several strategies that a family can use to improve the student’s eligibility for need-based
financial aid by reducing the expected family contribution (EFC). Some of these strategies involve
repositioning the family’s income and assets. Other strategies involve tweaking the family’s demographic
information.
Tell the Truth
Do not lie on the FAFSA. There’s a difference between using insights into the financial aid formula to
avoid making mistakes that hurt the student’s financial aid eligibility and lying about one’s income,
assets and demographic information.
People who lie on financial aid application forms are often caught. About one-third of FAFSAs
are selected for verification, where the applicant has to provide copies of independent third-party
documentation of the data reported on the FAFSA. In contrast, the Internal Revenue Service (IRS) audits
only about one percent of federal income tax returns. Financial aid administrators have more experience
detecting fraud on financial aid forms than families have in perpetrating fraud. Inconsistencies between
information reported on the FAFSA and federal income tax returns often reveal unreported income and
assets. The IRS and the U.S. Department of Education continue to share data to improve accuracy and
detect fraud on the FAFSA. (The IRS does not, however, currently use FAFSA data to detect fraud on
federal income tax returns.)
Intentionally providing false and misleading information on the FAFSA is fraud. The penalties for lying
on the FAFSA include, but are not limited to, fines of up to $20,000 and up to five years of jail time,
in addition to repaying the financial aid received by the student. Some colleges and universities will
suspend or expel a student for providing false information on financial aid application forms.
Test Strategies First
Before using any strategy, test it by playing a what-if game with an EFC calculator. Don’t waste time
and effort on implementing a strategy that doesn’t affect the student’s EFC. For example, if the family
qualifies for the simplified needs test, there is no point in shifting assets from the child’s name to the
parent’s name, since all assets will be disregarded.